You are serving as the chair for your community's annual wellness campaign. A key event is the annual Walk 3k, Run 10k, Ride 20k event. The event is staged entirely by volunteers and the goal is to attract community-wide awareness of getting active as a key step to wellness. In other words, the goal is not to raise money, but to prompt awareness. As the chair, you set a financial goal to break even on the one and only cost of the event, a fitness bag with the community seal and the event motto, "I AM ON THE RIGHT TRACK!"

The break-even point implies that the total revenue received from the fitness bag equals the total cost of making that bag. Therefore, price is set at this level, since the aim is not to raise money.

Step-by-step explanation

A key event is the annual Walk 3k, Run 10k, Ride 20k event, which is entirely staged by volunteers. The goal is not to raise money, but to prompt community-wide awareness of getting active as a key step to wellness. A financial goal is set that will break even on the only cost of the event, that is a fitness bag with the community seal and the event motto, "I AM ON THE RIGHT TRACK!".

Now, since the goal is not to make money, that is why the financial goal is to set the price at the break-even level. At this point, the revenue equals the total cost of making the fitness bag, and neither any profit would be made, nor any loss would be incurred. Any point below the break-even, implies a loss as total cost exceeds the revenue. Again, any point above the break-even point implies a profit since revenue exceeds cost. The break-even level of price is inclusive of all costs. Therefore, to be in sync with the event's non-profit making motive, a break-even point is chosen, at which the price of the fitness is at such a level, where revenue earned from selling the bag equals the cost of making that bag.

Usually the formula for the break-even level of price is given by:

(Total fixed cost / volume of production unit) + per unit variable cost.